Wednesday, March 16, 2022

DJIA: 34,063.10, up 518.76
S&P 500: 4,357.86, up 95.41
Nasdaq: 13,436.55, up 487.93

Stocks and yields climb after Fed decision

U.S. stocks finished firmly higher on Wednesday as Wall Street digested the latest Federal Reserve (Fed) policy decision. As widely expected, the central bank raised its benchmark rate by 25 basis points (0.25%), the first such move since 2018. The Summary of Economic Projections implied policymakers could hike rates six additional times in 2022 in an effort to combat persisting price pressures. Fed Chair Jerome Powell anticipated inflation would peak mid-year, but signaled that officials could tighten monetary policy more quickly, if appropriate, noting that the U.S. economy was positioned to withstand the adjustments. Optimism over potential Russia-Ukraine ceasefire talks also buoyed risk appetite, with both sides offering upbeat comments.

The S&P 500 climbed 2.2%, while the Nasdaq Composite surged 3.8%, with both benchmarks posting their first back-to-back gains in March. The Dow rallied 518 points, turning higher for the month. Treasuries weakened following the Fed decision, with the yield curve flattening. The 10-year note yield climbed three basis points (0.03%) to 2.18%, while the two-year note yield spiked seven basis points (0.07%) to 1.92%, with both near their highest level since mid-2019. In commodities, West Texas Intermediate crude dropped 1.4% to $95.07/barrel. On the data front, retail sales rose a smaller-than-anticipated 0.3% in February, compared to January’s upwardly revised 4.9% gain.

Nine of 11 S&P 500 sectors closed in positive territory, with Energy and Utilities the lone laggards. Consumer Discretionary and Information Technology sectors outperformed amid strength in growth-oriented names. In corporate news, Micron Technology Inc. and Starbucks Corp advanced 9% and 5.2%, respectively, on the heels of analyst upgrades.

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